Should I Rent My Property?
Renting out your property can be a great way to generate additional income, but it also comes with its own set of challenges and responsibilities. If you’re considering becoming a landlord, here are some important factors to keep in mind to ensure a smooth and successful rental experience.
1. What Is Your Motivation?
People choose to rent for various reasons. Maybe it’s a suite in your primary residence helping to pay your mortgage. Perhaps it was your first home, which you kept as an investment when you outgrew the space (that was me… accidentally falling into the world of a landlord). Or maybe you are starting to build an investment portfolio looking for a monthly return, appreciation over time, or both (hopefully both, right?). Determining if you are looking for income to help with cost of living or a long-term investment strategy will help shape your mindset around your rental property.
2. Understand Your Local Rental Market
Now that you understand your motivation and goals for renting or investing in property, it’s crucial to understand the local rental market. In some cases, your dream of certain revenue may not match the current market, and sometimes the market is greater than you expected. By researching the average rental rates in your area, the demand for rental properties, and the types of properties that are most popular, you will get a sense of what rent your property can command. This will help you determine if renting is right for you. If it is, you can set a competitive rent price and attract quality tenants.
3. Know Your Responsibilities
My husband always says, “there is no free lunch” – side note, he is actually in his 30s, even though sayings like that make him seem 60. Being a landlord comes with work and responsibilities. The most important of these are safety and legal responsibilities. In British Columbia, we are facing many government changes to tenant laws, and it is critical for landlords to educate themselves on their rights and the rights of their potential tenants. Key areas to familiarize yourself with include tenant rights, lease agreements, security deposits, eviction procedures, and property maintenance. Staying compliant with these regulations will help you avoid legal issues and maintain a positive relationship with your tenants. No one likes going to the Residential Tenancy Board – it’s no fun at all!
4. Prepare Your Property
I like to ask, “would I be happy living here?” Although every property is different and has its quirky charms, some key safety and quality standards should be part of each property. This includes making necessary repairs, ensuring all appliances are in working order, and addressing any safety concerns. Although this may be money out of pocket initially – trust me, you will see that investment returned by attracting quality tenants who pay rent on time and the ability to command a higher monthly rent.
5. Set a Fair Rent Price
Alright, so you’ve decided to rent and have your physical space ready. Now, you need to set the rent and get the listing prepared. From step one, you will know approximately what the market will bear for your property. Depending on your goals and risk tolerance, you can price it in the lower/middle range to ensure you get many applicants and your choice of tenant. Or you can price it in the middle to higher end, which will bring fewer applicants but could bring in a higher monthly rent. No way is the right way; it is all about how you want to set up your listing and how risk-averse you are to potentially having the property vacant longer for that higher rent.
6. Screen Potential Tenants
I’m not going to lie; the application and screening process is cumbersome. But, there is no way around it, and it is arguably the most important step. Finding the right tenants is crucial for a positive rental experience. This is especially true in British Columbia, where lease agreements automatically move from fixed-term to month-to-month. You want to be sure you like and trust your tenants. Conduct thorough background checks, including credit checks, employment verification, and references from previous landlords. This will help you identify reliable tenants who are likely to pay rent on time and take good care of your property.
7. Create a Solid Lease Agreement
A well-drafted lease agreement is essential for protecting your interests and clearly outlining the terms of the rental. Include details such as the rent amount, payment due dates, security deposit, maintenance responsibilities, and rules for property use. Remember, verbal agreements are hard to prove, and our memories have a funny way of morphing over time – the old “he said/she said” situation. Having all the key points of the agreement in writing and signed off on will help you clear up misunderstandings and could protect you in the case of a formal dispute.
8. Plan for Property Management
Decide whether you’ll manage the property yourself or hire a property management company. This is a big one! Obviously, I am biased and think you should hire us to make your rental property stress-free. But in all seriousness, with a property management company, you can consider points 1-3 above, and after that, the property management company can take over. There are some considerations when deciding which route is right for you.
I managed my properties myself for many years. Here is why I think it worked for me: I had time to take it on, I was in a sales/relationship management role at my day job (so, I liked working with people), I was used to conflict resolution (through client management), and was comfortable with legal agreements. So, it worked for me. I liked it so much I became a property manager!
On the flip side, managing the property on your own can save money but requires time and effort. I have clients that lack the time or desire to learn the intricacies of the British Columbia Residencial Tenancy Act. Or it doesn’t suit their personality or mental health to deal with tenants regularly. For them, the property management we provide is well worth the investment. A property management company can handle tasks such as listings, tenant screening, rent collection, property repair and maintenance, and legal issues, allowing you to enjoy a more hands-off approach.
9. Prepare for Maintenance and Repairs
On an ongoing basis, home ownership requires work. Sad but true. Regular maintenance and prompt repairs are essential for keeping your property in good condition and maintaining tenant satisfaction. Create a maintenance schedule and budget for unexpected repairs. Having a list of reliable contractors and service providers can also save you time and stress when issues arise. This is also an area where a property manager can take the stress out of home ownership for you.
10. Get the Right Insurance
Ensure you have the appropriate insurance coverage for your rental property. Landlord insurance typically covers property damage, liability, and loss of rental income. It’s also a good idea to require your tenants to get renters insurance to protect their belongings and liability.
11. Consider Your Financial Goals
Renting out your property can be a profitable venture, but it’s important to consider your long-term financial goals. Calculate the potential rental income, expenses, and any tax implications. This will help you determine if renting out your property aligns with your financial objectives.
Conclusion
Renting out your property can be a rewarding experience if you take the time to plan and prepare. By understanding the local market, knowing your legal responsibilities, and taking steps to attract and retain quality tenants, you can create a successful rental business. Whether you’re managing the property yourself or hiring a property management company, being proactive and informed will help you navigate the challenges of being a landlord and make the most of your investment.
If you have any questions or need assistance with managing your rental property in North Okanagan, feel free to contact Stevie Riley Realty for expert advice and support.
